A man who was wrongly suspected by police of being a wanted suicide bomber has told of his terrifying ordeal after officers dragged him out of his car and forced him to the ground at gunpoint.

Omar Ahmet believes he came close to being shot dead by police, who thought he was one of the terrorists who attacked London's transport system on July 21, 2005. His case has echoes of the killing of Jean Charles de Menezes whom police mistook for another of the July 21 bombers.

Ahmet's ordeal was captured on video, believed to be the only moving pictures to have surfaced of armed police detaining an innocent man they thought to be a terrorist. The case has come to light in an official report detailing what led police to wrongly suspect Ahmet. The report by the Independent Police Complaints Commission is marked restricted and concludes police acted reasonably, which Ahmet disputes. He decided to go public with his story after coverage of an armed policeman arresting a suspect at Bournemouth train station, who was also spreadeagled on the floor at gunpoint.

Police came to suspect that Ahmet, who is fair-skinned and of Cypriot heritage, was the wanted terrorist Muktar Said Ibrahim, who is black and originally from Eritrea. On July 27, 2005, Ahmet checked into a hotel in Liverpool. A hotel worker believed he looked like Muktar Ibrahim, whose picture he saw in a newspaper, and called Merseyside police saying he was "85%" certain the man in the hotel was the terrorist.

According to the IPCC report, police checked the hotel's CCTV footage but could not determine whether Ahmet was the wanted terrorist.

Five days after armed police in London shot dead the innocent Jean Charles de Menezes, it was decided that armed officers should ambush the suspect on foot.

As Ahmet went to his vehicle in the hotel car park just after 8am, police were lying in wait. As he sat in the driver's seat, an unmarked white van pulled up and armed officers jumped out. They dragged him out of the car and subdued him in eight seconds.

IPCC investigators heard from a detective constable involved in the arrest. According to their report: "On arrival at the scene he went to the 'suspect' vehicle and as planned smashed the rear offside passenger window of the vehicle as a distraction." He saw the 'suspect' [Ahmet] being removed from the vehicle and placed face down on the floor.

The IPCC said there was insufficient evidence to justify Ahmet's complaints that he had been ill-treated by police while on the ground.

Ahmet said: "I felt an object at the back of my head, which I realised was a gun. If I'd made a sudden movement I would have been shot. I thought my time was up. I thought I was going to die."

He said police should have been more thorough in the checks they made before stopping him at gunpoint: "They could have done more checks, the hotel had my car rental agreement and credit card, which had my address in Maidenhead." The suspect lived in London. Ahmet added: "I don't mind being stopped by the police. It's the violence they used. When I walked into the hotel I saw that they had CCTV. You could see I was white and the man in the paper was black."

Police soon realised Ahmet was not the man they were looking for. He was taken to a police station where he was medically examined and told by an Afro-Caribbean police officer that such an incident "could happen to any person of colour, even himself, because of the heightened levels of security".

The IPCC report concluded the arrest was lawful: "The available intelligence passed on to the officers ... made it clear that there was a realistic possibility that the 'suspect' was indeed an extremely dangerous individual who may have been involved in the gravest possible offences.

"The officers deployed to the Travelodge hotel believing that they were engaged in an operation to detain and arrest a potential 'suicide' bomber."

Ahmet is still planning to sue the police. The report said: "One can only imagine the trauma which Mr Ahmet suffered as a result of the incident. An innocent man, he was caught up in an operation which was terrifying both in its execution and its potential consequences."